Alibaba’s Latest Move in Travel is a Partnership with “China’s Airbnb” Xiaozhu

Just over a month since Booking Holdings’ Agoda announced its partnership with Chinese home sharing platform Xiaozhu, Alibaba has now similarly announced a partnership with Xiaozhu. The ambition is that Alibaba and Xiaozhu’s partnership will strengthen Alibaba’s OTA Fliggy, while also exposing prospective travelers on Fliggy to what Xiaozhu’s has to offer in terms of accommodation. To top everything off, Xiaozhu will be introducing Fliggy’s “credit living” post-pay system, and consequently becomes the first home sharing platform to offer payment upon check out.

Or in other words, the year of partnerships and newfound friendships in the Chinese tourism industry is continuing. In just the last few weeks, we’ve seen a myriad of new partnerships and investments initiated by giants such as Alibaba, Ctrip, and HNA.

But more than just a continuation what is becoming an increasingly complex web of allegiances in the Chinese tourism industry, Alibaba and Xiaozhu’s partnership is also evidence of a Chinese home sharing market that is heating up. With Airbnb China turning misfortune into fortune in the Chinese market, and Ctrip-backed Tujia picking up steam and name recognition internationally, Xiaozhu has plenty of reasons to make new friends.

Similarly, Alibaba is doing its best to counter rival Tencent’s moves into the Chinese tourism market while also trying to strengthen Fliggy, an OTA that still lags far behind peers like Ctrip.

The integration of Xiaozhu inventory on Fliggy should realistically help Xiaozhu attract new customers who may not have thought to look for accommodation’s on Xiaozhu while booking a trip through Fliggy. Meanwhile, Fliggy strengthens its total offering in the travel market by adding the over 350,000 properties listed on Xiaozhu—spanning both China and overseas destinations. Fliggy, still very much a youth-oriented brand, may also see added inventory in home sharing as a doubling down on the core demographic it’s attempting to target.

And while this may seem like the apparent takeaway from Alibaba and Xiaozhu’s announcement of their newfound partnership, the companies are actually putting the primary emphasis on Xinyongzhu (“credit living”) and what it’ll mean to Xiaozhu users.

In essence, Xinyongzhu is a credit rating system employed by Fliggy which scores users based on Alipay payments and “big data” of its parent company, Alibaba. Alibaba, which is currently developing the infamous Sesame Credit credit scoring system, is no stranger to in-house credit score systems and may hope that Xiaozhu will just be the first of many companies to start using its credit score products.

For Xiaozhu users, or presumably those with good “credit living scores,” the new system would allow them to pay for their Xiaozhu-booked accommodation after checking out. Fliggy and Xiaozhu describe this as the “the first post-pay service in the house-sharing industry,” and a testament to both companies’ innovativeness.

Who knows, maybe a good track record with Xiaozhu bookings will eventually improve one’s Sesame Credit?